Teva Pharmaceutical Industries Ltd. won U.S. regulatory approval to sell a new treatment for migraines, a key part of the company’s turnaround strategy. The stock surged in after-hours trading.
The U.S. Food and Drug Administration approved Ajovy, an injection administered every few months to relieve migraines in adults, the Israeli drugmaker said in a statement late Friday. More than 36 million people in the U.S. suffer from these debilitating episodes, and the medicine could generate around $500 million of sales by 2022, according to analyst estimates compiled by Bloomberg.
Ajovy’s launch could help Teva, the world’s largest generic drugmaker, eventually replace declining sales of Copaxone, its aging star product. Investors have tracked the new drug’s trajectory as one of the few channels of growth for the debt-ladden pharma giant. Chief Executive Officer Kare Schultz embarked on a massive cost-cutting plan last year and placed debt repayment as his top priority, in effect shelving designs to increase sales in the coming two years.
With the drug’s approval, Schultz enhanced his credibility with investors, some of whom were skeptical that the company would be able to begin selling the drug on time and thus lose more ground to Amgen Inc.’s Aimovig, which has been on the market since May. Teva shares rose 6 percent after the market closed in New York on Friday.
“Hitting this target is very important validation for management’s credibility,” Evercore ISI analyst Umer Raffat wrote in an emailed note to clients.
Ajovy will cost as much as Aimovig. “We looked at the value that we believe we will bring to patients and migraine sufferers, and we thought a parity price to Aimovig at $575 a month was appropriate,” said Brendan O’Grady, executive vice president and head of Teva’s commercial operations in North America.
“We think this is a huge value for a patient population with a tremendous need that payers will look at this and give pretty broad and open access to the entire class,” O’Grady said.
The competition for the multi-billion dollar market is set to heat up further with the FDA expected to decide on another migraine therapy from Eli Lilly & Co. next month. “Marketing and patient access” will be what determines who pulls ahead since the companies offer “similar products,” according to a Bloomberg Intelligence note.